ON MONDAY, investors panicked. Having had the weekend to mull over the losses that sent the Nasdaq 2.5 per cent lower last Friday, sellers piled out of anything that could be broadly considered a tech stock – from FTSE 100 chipmaker Arm to recent market entrant AO.com.
Yesterday, they seemed to have calmed down a bit. While a slew of online retailers carried on falling, investors piled back into the hardware stalwarts, sending Arm shares back up and tempering the sell-off in peer CSR and software group Sage.
There’s a stark difference between those firms, some of which have been listed on the FTSE for almost 20 years, and the new kids on the block like AO.com, Boohoo and Just-Eat, which continued to suffer big losses yesterday.
Arm, CSR and their peers make stuff: actual, tangible stuff that investors can see and touch and smell (if they’re so inclined). Their technology underpins big ticket products from PCs to smartphones to car safety systems.
All of which means it also underpins the internet-based retailers that have made the most of the recent interest in high-growth, frothily valued tech flotations. AO.com and Just-Eat may sell fridges and fast food, but they couldn’t do it without the power of the processors made by their techie big brothers.
After the first flush of desire, racy internet shares may be out of favour with investors for a while. But the return to their more established forebears proves that good stocks will see out the storm.